South Africa’s government recently enacted a 150% tax incentive for the production of electric- and hydrogen-powered vehicles. The legislation, signed into law on January 3, is forecast to unlock roughly $27 billion in new investment in the country’s electric vehicle (EV) sector.
As a result, South Africa’s EV market is on track for substantial growth in the coming years, with anticipated revenues of approximately $101.3 million in 2025. This trend is anticipated to maintain a compound annual growth rate of 8.73%, reaching $141.6 million by 2029. Key factors driving EV market growth in South Africa includes favorable fiscal and legislative incentives, rising environmental awareness among consumers and expanding EV infrastructure.
Investment Surge
During his 2024 Budget Speech, South Africa’s Minister of Finance Enoch Godongwana announced that the National Treasury redirected approximately $51 million over the medium term to support the national automotive industry’s shift to EVs. This new investment allowance for EV technologies will come into effect on March 1, 2026, positioning South Africa as a potential hotspot for EV investment from major international players.
Meanwhile, the government’s ambitious tax incentive, which targets both local and international manufacturers, is expected to attract significant interest in EV and hydrogen fuel cell developers. In light of the tax break, China has begun actively encouraging its EV manufacturers to invest in South Africa in a bid to strengthen ties between the two countries, with three Chinese automakers having signed non-disclosure agreements related to potential investments in the sector.
A Competitive Edge
South Africa’s strategic geographic position, abundant solar irradiation levels and robust industrial infrastructure positions the country as an attractive market for EV development. The country’s access to raw materials – boasting substantial reserves of lithium, manganese, nickel, graphite and rare earth elements – and skilled workforce further strengthens its potential to lead in green mobility innovation.
South Africa, which holds 80% of the world’s platinum group metals reserves – crucial for EV and hydrogen vehicle production – is currently leading EV development on the continent. Recent advancements include mining firm Isondo Precious Metals’ plans to launch an advanced manufacturing facility for processing PGMs for EV applications in Johannesburg. Meanwhile, global automaker BMW, mining firm Anglo Platinum and energy company Sasol are piloting a fleet of hydrogen-fueled vehicles to advance smart mobility adoption in the country.
As South Africa continues to strengthen its position as a global leader in electric mobility, the combination of government incentives, strategic resources and international partnerships sets the stage for sustained growth in the EV sector. Looking ahead, the country’s commitment to innovation and green technologies is likely to attract further investment, positioning it as a critical hub for the future of sustainable transportation in Africa and beyond.
